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The Euro dipped against the dollar after report said the ECB policymakers are worried about Euro's strength. This may raise chances of a delay in decision about QE tapering. Sources said that asset purchase program could be phase out only slowly. According to the initial schedule the program is due to expire at the end of 2017, but it looks quite unlikely that the ECB will take any decision in their policy meeting next week, as formal talks about next steps on QE program are only beginning. Likely scenario is for gradual rather than rapid reduction in asset buying, especially in the zone's weaker economies, in rising worries that stronger Euro could further dampen inflation and slow down economic growth. The asset purchase program, also known as Quantitative easing was launched 2 1/2 years ago in order to revive growth and boost inflation and ECB's President Mario Draghi said that the program will continue until the central bank sees inflation consistent with its target of just below 2%. In addition to the latest news, technicals are also favoring further weakness which could extend, as completion of reversal pattern and Wednesday's long bearish candle continue to weigh. The EURUSD pair is focusing next support at 1.1811 (20SMA) and 1.1790 (30SMA) after fresh bears cracked initial support, provided by rising 10SMA.

Res: 1.1900; 1.1910; 1.1941; 1.1984
Sup: 1.1811; 1.1790; 1.1773; 1.1740

Notes/Observations

No upside surprises in numerous EU data in session; Overall Euro Zone date mixed (Germany retail sales miss; Italy unemployment misses, Euro Zone Unemployment in-line, France CPI in-line, Euro Zone CPI touch higher)

Overnight

Asia:

Bank of Korea (BOK) left its Repo Rate unchanged at 1.25% (as expected) for its 14th straight pause in the current easing cycle. Reiterated to maintain stance of policy accommodation.

China Aug Manufacturing PMI (Govt Official): 51.7 v 51.3e, Non-manufacturing PMI: 53.4 v 54.5 prior

Europe:

PM May: Want to continue as Britain's leader beyond the next parliamentary election, not due until 2022, dismissing expectations she could stand down after Brexit as early as 2019

UK reportedly believes EU negotiators have not been given the freedom to negotiate in Brexit discussions

German Parliament report said to believe that Brexit talks may fail; EU warns members to resist UK Brexit lobbying

France President Macron: Euro Zone should plan to create joint budget that amounts to several points of GDP. Euro Zone body should be able to tap bond market and have sufficient fiscal firepower

France Fin Min Le Maire: Upcoming budget bill includes plans for corporate tax rate cut to 31% from 2019, 28% in 2020, 26.5% in 2021, 25% in 2022; small company taxes to be slashed first ; favorable to entrepreneurs

Americas:

President Trump speech in Missouri called for lower taxes on companies and workers in the US. Renewed call for simplification of US tax code. Ideally corporate tax rate should be at 15% and called for tax relief for middle income Americans

Defense Sec Mattis: the US is not out of diplomatic solutions with North Korea

Mexico Foreign Secretary Luis Videgaray: Mexico will not negotiate "NAFTA or any other issue in the bilateral relationship" in the media or on the social networks

Energy:

US Coast Guard said to partially re-open Houston Ship Channel to vessels. Ports of Houston, Texas City, Galveston and Freeport said to have opened with restrictions.

EPA waived requirements for reformulated gasoline and low volatility gasoline through September 15th

Economic data

(DE) Germany July Retail Sales (miss) M/M: -1.2% v -0.6%e; Y/Y: 2.7% v 2.9%e

(FR) France Aug Preliminary CPI (in-line)M/M: 0.5% v 0.5%e; Y/Y: 0.9% v 0.9%e

(FR) France Aug Preliminary CPI EU Harmonized M/M: 0.6% v 0.6%e; Y/Y: 1.0% v 1.0%e

(DK) Denmark Q2 Preliminary GDP Q/Q: 0.6% v 0.5%e; Y/Y: 2.7% v 2.6% prior

(DE) Germany Aug Net Unemployment Change (slight miss): -5K v -6Ke; Unemployment Rate: 5.7% v 5.7%e

(IT) Italy July Preliminary Unemployment Rate (miss): 11.3% v 11.1%e

(PL) Poland Q2 Final GDP Q/Q: 1.1% v 1.1% prelim; Y/Y: 3.9% v 3.9% prelim

(EU) Euro Zone Aug Advance CPI Estimate (slight beat) Y/Y: 1.5% v 1.4%e; CPI Core Y/Y: 1.2% v 1.2%e

(EU) Euro Zone July Unemployment Rate (in-line): 9.1% v 9.1%e

(IT) Italy Aug Preliminary CPI (NIC including tobacco) M/M:0.3 % v 0.2%e; Y/Y: 1.2% v 1.1%e

(IT) Italy Aug Preliminary CPI EU Harmonized M/M: 0.1% v 0.0%e; Y/Y: 1.4% v 1.3%e

Fixed Income Issuance:

(SE) Sweden sold total SEK750M in 2025 and 2026 I/L Bonds

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.5% at 373, FTSE +0.6% at 7412, DAX +0.5% at 12061, CAC-40 +0.5% at 5081, IBEX-35 +0.7% at 10315, FTSE MIB +0.6% at 21630, SMI +0.5% at 8897, S&P 500 Futures +0.3%]

Market Focal Points/Key Themes: European Indices continues to recover trading modestly higher across the board with grains ranging from 0.4% to 0.7% higher. Minors and construction stocks lead the decliners while the retail sector weighs following Carrefour results and cut outlook with the shares down over 13% and Casino down 5%. Elsewhere Pernod Ricard trades lower following results, whilst Telecom name Bouygues is an outperformer after strong numbers. Looking ahead to the US morning, looking out for earnings from Dollar General, Campbell Soup and TD Bank, as well as a raft of monthly same store sales numbers from retailers.

Equities

Consumer discretionary [Carrefour [CA.FR] -14.4% (Earnings, cuts outlook), Pernod Ricard [RI.FR] -3.5% (Earnings), Ladbrokes Coral [LCL.FR] -0.9% (Earnings), Restaurant Grp [RTN.UK] +6.2% (Earnings), Metro [B4B.DE] -1.8% (Earnings), 888 Holdings [888.UK] +4.3% (Announces conclusion of UKGC licence review), Hays [HAS.DE] +1.8% (Earnings)]

Telecom: [Bouygues [EN.FR] +2.2% (Earnings)]

Speakers

BOE MPC member Saunders (dissenter)noted that his future votes to depend on economic data; July inflation dip was not a turning point. Believed that a modest rise in rate would be helpful and give space to move gradually. CPI likely to rise to around 3% in coming months (*Note: in-line with majority view). BOE not indifferent to GBP currency (Pound) depreciation but no certain level would trigger concern

SNB's Maechler. CHF currency (Franc) continued to evolve in a narrow band. CHF was moving in the right direction but too early to say of depreciation would last. Negative interest rates and readiness for FX intervention are still necessary. Global economy has gained momentum

France Fin Min Le Maire: Stronger Euro currency was a concern for the domestic economy; reiterated view that French econ omy was fragile and vulnerable

UK PM May: Japanese investment in UK after Brexit was a powerful vote of confidence and could engage more actively with Asia markets after Brexit. Agreed ambitious program of working with Japan to improve bilateral relations

EU's Timmermans: Poland reply in rule-of-law probe was inadequate; govt showing no sign of dialogue

Germany's DIHK chamber of industry: UK undermining the Brexit process

Turkey Presidential advisor Ertem: Recent TRY currency (Lira) appreciation is not a risk for exports

Japan PM Abe: UK was a very important base for Japanese manufacturing; had trust in UK economy after Brexit - comments alongside PM May

China Defense Ministry: China will never allow war or chaos near its doorstep. Reiterated view that all sides should show restraint

Currencies

USD continued its recent recovery with dealers attributing that the US need to pass a disaster relief package for Hurricane Harvey might make it easier for Congress to raise the debt ceiling next month. Some improvement in US economic data also aiding the greenback.

EUR/USD was approx. 200 pip off its recent 2 1/2 highs. The recent elevation of the Euro was potential cause of concern as it would hamper the improvement on EU inflation front. Analysts noted that additional strength of the euro could prompt a dovish tapering from the ECB next week. France Fin Min Le Mairea deed some verbal intervention noting that a stronger Euro currency was a concern for the domestic economy.A tick higher in Aug CPI data helped the EUR/USD regain a foothold above the 1.19 level ahead of the NY mornng.

USD/JPY was back at a 2-week high in the mid-110 area as the Korean Peninsula situation eased. The US/South Korean military drills were nearing its scheduled end after 10 days.

SNB official seemed to acknowledge the recent weakness in the CHF but cautioned that it was too early to give the all-clear signal. Negative interest rates and readiness for FX intervention are still necessary

GBP was slightly lower in the session and ignored commentary by BOE hawk Saunders that country could handle raising interest rates and warned of getting "behind the curve"

Fixed Income

Bund futures trades at 165.05 down 12 ticks, oscillating with stocks, initially falling below Wednesday's low of 164.92. Downside targets 164.50 followed by 163.75. To the upside the 165.75 to 166.00 remains key resistance.

Gilt futures trades at 128.27 down 10 ticks, relatively unfazed from BOE's Saunders hawkish comments. A resumption to the upside could eye 129.25 then 130.10. A move back below 128.25 targets 126.51

Thursday's liquidity report showed Wednesday's excess liquidity rose to €1.729T from €1.716T and use of the marginal lending facility fell to €109M from €640M.

Corporateissuance saw $1.5B come to market via Svenska offering. In the sovereign space analysts see supply amounting to ~€96.9B in Sept, which would be the second busiest time all-time.

Looking Ahead

(FI) Finland Government drafts 2018 Budget - (CA) Canada Aug CFIB Business Barometer: No est v 60.7 prior

(BR) Brazil Aug CNI Consumer Confidence: No est v 99.5 prior

05:30 (ZA) South Africa July PPI M/M: +0.2%e v -0.3% prior; Y/Y: 3.5%e v 4.0% prior

05:30 (SL) Sri Lanka Aug CPI Y/Y: 6.0%e v 4.8% prior

05:30 (HU) Hungary Debt Agency (AKK) to sell Bonds (3 tranches)

06:00 (PT) Portugal Q2 Final GDP Q/Q: 0.2%e v 0.2% prelim; Y/Y: 1.8%e v 2.8% prelim

07:00 (ZA) South Africa July Electric Production Y/Y: No est v 1.6% prior; Electricity Consumption Y/Y: No est v 1.6% prior

07:00 (IN) India July Fiscal Deficit

07:30 (US) Aug Challenger Job Cuts: No est v 28.3K prior; Y/Y: No est v -37.6% prior

08:00 (IN) India Q2 GDP Y/Y: 6.5%e v 6.1% prior, GVA Y/Y: 6.2%e v 5.6% prior

08:00 (IN) India July Eight Infrastructure (Key) Industries: No est v 0.4% prior

08:00 (ZA) South Africa July Trade Balance (ZAR): 7.1Be v 10.7B prior

08:00 (PL) Poland Aug Preliminary CPI M/M: -0.1%e v -0.2% prior; Y/Y: 1.8%e v 1.7% prior

08:00 (BR) Brazil July National Unemployment Rate: 13.0%e v 13.0% prior

08:00 (CL) Chile July Unemployment Rate: 7.1%e v 7.0% prior

08:05 (UK) Baltic Dry Bulk Index

08:20 (AT) German Bundesbank's Dombret and Austria's Fin Min Schelling in Alpbach

08:30 (US) Initial Jobless Claims: 238Ke v 234K prior; Continuing Claims: 1.95Me v 1.954M prior

08:30 (US) July Personal Income: 0.3%e v 0.0% prior; Personal Spending: 0.4%e v 0.1% prior, Real Personal Spending (PCE): 0.3%e v 0.0% prior, Personal Saving Rate: No est v 3.8% prior

08:30 (US) July PCE Deflator M/M: 0.1%e v 0.0% prior; Y/Y: 1.4%e v 1.4% prior

08:30 (US) July PCE Core M/M: 0.1%e v 0.1% prior; Y/Y: 1.4%e v 1.5% prior

08:30 (CA) Canada Jun GDP M/M: 0.1%e v 0.6% prior; Y/Y: 4.1%e v 4.6% prior; Q2 Quarterly GDP Annualized: 3.7%e v 3.7% prior

08:30 (US) Weekly USDA Net Export Sales

09:00 (BE) Belgium Q2 Final GDP Q/Q: No est v 0.4% prelim; Y/Y: No est v 1.4 prelim

09:00 (RU) Russia Gold and Forex Reserve w/e Aug 25th: No est v $419.9B prior

09:45 (US) Aug Chicago Purchasing Manager: 58.5e v 58.9 prior

10:00 (US) July Pending Home Sales M/M: 0.4%e v 1.5% prior; Y/Y: 0.5%e v 0.7% prior

10:00 (MX) Mexico July Net Outstanding Loans (MXN): No est v 3.790T prior

10:30 (US) Weekly EIA Natural Gas Inventories

11:00 (CO) Colombia July National Unemployment Rate: No est v 8.7% prior; Urban Unemployment Rate: 10.7%e v 10.8% prior

11:00 (BR) Brazil to sell Fixed Rate 2023 and 2027 Bonds

11:00 (BR) Brazil to sell 2018, 2019 and 2021 LTN Bills

13:00 (NZ) New Zealand Aug QV House Prices Y/Y: No est v 6.4% prior

15:00 (AR) Argentina July Industrial Production Y/Y: 6.0%e v 6.6% prior

15:00 (CO) Colombia Central Bank Interest Rate Decision: Expected to cut Overnight Lending Rate by 25bps to 5.25%

Strong rally extends into third consecutive day and hits fresh two-week highs on Thursday, approaching key near-term barriers at 111.00 zone, as daily cloud twist continues to attract. Firmly bullish studies on lower timeframes and improving daily technicals are supportive for final push towards a cluster of barriers at 111.00 zone (former tops of 04/16 Aug/converged 100/55SMA's) above which a number of stops is parked that may trigger further acceleration higher on firm break. Meanwhile, bulls may show signs of hesitation at 111.00 barriers as slow stochastic is overbought on daily chart and suggests easing, but without firmer signals so far. Broken 30SMA offers initial support at 110.13, ahead of 20SMA at 109.77.

Res: 110.66, 110.94, 111.18, 111.65
Sup: 110.13, 109.77, 109.53, 109.18

Crude Oil is trading lower. Hourly support is given at 45.40 (17/08/2017 high). Strong resistance can be found at 50.41 (31/07/2017). Expected to show continued short-term bearish move.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 35.24 (05/04/2016) while resistance can now be found at 55.24 (03/01/2017 high).

Silver's bullish pressures are strong. Hourly resistance is given at 17.32 (18/08/2017 high) while support can be found at 16.58 (15/08/2017 high). The commodity lies in an uptrend channel. Expected to show another leg higher.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

Gold is surging. Hourly support is given at a distance 1251 (08/08/2017 low). Stronger support lies at 1204 (10/07/2017 high). Expected to show continued increase.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low)

Bitcoin has set a new all-time high. Hourly support lies very far at 3599 (22/08/2017 low). The road is wide open for another bullish move.

In the long-term, the digital currency has had an exponential growth. There are decent likelihood that the asset will consolidate above $1500. Long-term support is given at $1464 (04/05/2017 low).

EUR/CHF recovery bounce has stalled below downtrend resistance located at 1.1407. Hourly support is located at 1.1260 (04/08/2017 low). Expected to show further consolidation.

In the longer term, the technical structure has reversed. Strong resistance at 1.1200 (04/02/2015 high) has been broken. Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

EUR/GBP's buying pressures continues. Hourly resistance lies at 0.9306 (29/07/2017 high). Hourly support is given at 0.9189 (24/08/2017 low). Downside risks are nonetheless important.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

US futures are pointing to a higher open on Thursday, as we await a batch of data that will be of interest to Fed policy makers ahead of next month's meeting.

Of course, Friday's jobs report is widely regarding as the most important data release each month due to the insight it offers on hiring, wages and therefore potential future inflation pressures. Today's data though is arguably equally important, if not more so at the moment, as it contains the latest inflation numbers – as per the Fed's preferred measure – as well as income and spending figures.

While the Fed has arguably achieved its target on the unemployment side, it still remains well short on inflation so today's data could be seen as the more important when it comes to determining when and how fast the Fed will raise interest rates going forward. Expectations are for inflation to remain at 1.4%, with core falling slightly, also to 1.4%, leaving the Fed once again trailing well behind its 2% target.

With earnings remaining subdued – albeit on a slightly positive trajectory this year – I'm not sure we're seeing enough to convince already uncertain policy makers that the current pace of tightening is appropriate. The December meeting – the most likely timing for the final rate hike this year – is fast approaching and without an improvement in the inflation and income data soon, it may well pass with rates unchanged and expectations going forward much lower.

Initial jobless claims and pending home sales data is also due today, although in all likelihood, focus will likely shift to tomorrow's jobs report after the inflation, income and spending numbers are released. It should therefore be a very interesting end to the week in the markets, even if political and geopolitical events don't rear their ugly head once again. Of course, we can't bank on this given their tendency to do so throughout August, which has helped the likes of Gold hit 2017 highs and remain near these levels. Risk appetite may be returning but traders are still clearly very cautious.